×

Cash for Clues: Law Gives Money to Whistleblowers

Tucked within the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law mid-summer, are new provisions, gone largely unnoticed by many, with monetary incentives that make it easier for employees to come forward with damaging information about their employers.

gavel_money_200.jpg

"It changes the landscape entirely," Nick Goldin, counsel at Simpson Thacher & Barlett, told CNBC's "The Strategy Session" on Friday.

"Dodd-Frank basically says that if you have information about virtually any type of financial wrongdoing and you share that with the government, and that information leads to a successful enforcement action then we'll pay you to," he said.

A whistleblower that brings "original information" to the SEC (Securities and Exchange Commission) or the Commodity Futures Trading Commission are entitled to collect between 10-30 percent of any recovery in excess to $1 million.

"It applies across the board, it is not just limited to employees. We are talking about employees, former employees, disgruntled former employees, customers, vendors, counter-parties—anyone more or less who has information about virtually any type of financial wrongdoing is elidgible," he said.

"Before Dodd-Frank there were opportunities for whistleblowers to collect financial bounties from the government, but they're really limited to information about fraud on the government—where the government was the victim or insider trading," Goldin said.

In addition, there are various protections for the individual, including recovering double back pay with interest and attorney fees if retaliated against by their employer.

Corporate America is concerned that as soon as you put money on the table, as soon as you are offer a financial bounty, you are incentivizing people in a new way of coming forward, which will may allow an individual to make a claim when there really may not be one, Goldin said.